Directors: Why you did what you did and why you will need to confirm!

29 June 2018

Each year business owners seem to face the compliance of meeting one important and topical regulation that is applied by the powers that be, either in the UK or from Europe. This year's big topic as you know was GDPR, but there are many other regulations that will need to be complied with.

For many small to medium size enterprises, the big topic some three or so years ago was auto-enrolment and ensuring that suitable pension arrangements were in place to comply with the regulations, along with the start of mandatory employer contributions, which most will know increased this year.

What may not be so obvious is the need to undertake a re-enrolment exercise at the third anniversary of the first auto-enrolment date. For many, this will fall over 2018 and 2019, and you are likely to receive a postal reminder direct from The Pensions Regulator. But what do you need to do?

Choose a re-enrolment date (you have a six-month window from which you can choose a date – this starts three months before and ends three months after the third anniversary of your staging date).

Assess and re-enrol staff on your re-enrolment date. This applies to staff who have opted out of the scheme, left the scheme after the end of the opt-out period or who have stayed in the scheme but chosen to contribute less than the minimum level.

Write to staff you have re-enrolled within six weeks of your re-enrolment date.

Complete a re-declaration of compliance with The Pensions Regulator within five months of the third anniversary of your staging date.

You may be aware that employee contributions rise again in April 2019 and many employers are starting to work towards notifying team members of this change a few months in advance as a reminder and to allow them to plan accordingly. Helpful, I am sure you would agree, but one important question to ask yourself is when was the last time you communicated the real benefits of what you do for your staff through your pension arrangement?

Chapters Financial has been working with our clients to help with these team communications to ensure that all are advised of changes that may affect their household budgets, but also to remind them of the benefits of what is being achieved. We have little doubt that some employees will always begrudge the opportunities, but many others welcome the important long-term savings. The Office for National Statistics noted in May 2018 that nearly 10 million people are now saving into a pension. That amounts to 74% of UK employees, whereas less than 47% were achieving savings six years earlier.

There is much to do in the re-compliance of schemes at a third (and every third) anniversary, both in terms of meeting requirements, but possibly more importantly in reminding team members of what is being achieved for the longer term.

Please do get in contact with the team at Chapters Financial in Guildford who can help you with your pension planning, both for the company, but also for business owners themselves.

No individual advice is provided during the course of this blog.

Keith Churchouse FPFS

Director, CFP Chartered FCSI

Chartered Financial Planner

Chapters Financial Limited is authorised and regulated by the Financial Conduct Authority, number 402899